Opt-in or Opt-out? The Power of Defaults in Pension Enrollment Choices

Default settings strongly increase pension enrollment, especially when savings incentives are high and choices are complex. We show that the effect is weaker when incentives are low, options are simple, and opting out is easy. We study the nationwide introduction of auto-enrollment for low income employees in Germany’s public pay-as-you-go pension system. We find that automatic enrollment raises participation by 23 percentage points, though most individuals actively opt out. Linking administrative and survey data shows that the default effect is stronger when enrollment incentives are higher and among individuals who lack knowledge of their enrollment status.

Bucher-Koenen, Tabea, Luisa Wallossek und Joachim Winter (2026), Opt-in or Opt-out? The Power of Defaults in Pension Enrollment Choices, ZEW Discussion Paper Nr. 26-014, Mannheim.